The Supreme Court has delivered a significant ruling in a high-profile design infringement case, rejecting appeals from several Indian footwear manufacturers, including Bata India and Liberty Shoes. This decision upholds the Delhi High Court's July 2025 judgment, allowing Crocs Inc. USA to proceed with its passing off suits against these companies.

Case Background

The case centers around allegations that Indian footwear companies have copied Crocs' distinctive foam clog designs. Crocs Inc. USA, known for its iconic foam clogs, had filed passing off suits against several Indian manufacturers, claiming that their products infringed on Crocs' unique design.

Key Points of the Ruling

Appeal Rejection

The Supreme Court dismissed petitions from Bata India, Liberty Shoes, and other footwear manufacturers challenging the Delhi High Court's decision.

Passing Off Suits

The ruling allows Crocs Inc. USA to continue with its passing off suits against the Indian companies.

Design vs. Trademark

The defendants argued that allowing the suits would create a dual monopoly over features protected under both design and trademark laws.

Implications for the Indian Footwear Industry

This ruling has significant implications for the Indian footwear industry, particularly for manufacturers producing foam clog-style footwear. The decision underscores the importance of intellectual property rights in the fashion and footwear sectors, potentially setting a precedent for future design infringement cases in India.

What's Next

With the Supreme Court's decision, the case will likely return to the lower courts for further proceedings on Crocs' passing off suits. This development may prompt Indian footwear manufacturers to reassess their product designs and intellectual property strategies to avoid potential legal challenges in the future.

The case highlights the ongoing tension between global brands protecting their designs and local manufacturers in emerging markets. It also emphasizes the need for clearer guidelines on the intersection of design and trademark laws in India's rapidly evolving retail landscape.

Bata India Limited , a leading footwear retailer, reported a 4% year-on-year decline in revenue for the second quarter, with total revenue standing at INR 8,000.00 million. The company attributed this drop to two major disruptions: the GST rate transition from 12% to 5% on footwear and operational issues at their largest distribution center in Jamalpur, which covers 40% of inventory.

Impact of GST Transition and Distribution Center Disruption

The GST rate rationalization, announced in mid-August and implemented on September 22, led to a deferral in buying from both consumers and channel partners. Bata India took proactive measures to mitigate the impact:

• Passed on GST-related benefits to consumers from the first week of September, ahead of the official implementation date.
• Provided incentives to channel partners, particularly franchisees and distributors, to minimize inventory holding at higher GST rates.

The company estimates that without these disruptions, it would have achieved flat revenue growth for the quarter.

Financial Performance

Bata India's financial performance for Q2 showed some pressure:

Despite the year-on-year decline, the gross margin improved sequentially by 190 basis points compared to Q1.

Strategic Initiatives and Outlook

Bata India continues to focus on its transformation initiatives:

1. Zero-Based Merchandising (ZBM): Expanded to cities like Gurgaon and Mumbai, with 90% of stores in these cities now on ZBM.
2. Inventory Management: Achieved double-digit reduction in inventory, improving freshness by 7% compared to the base.
3. Franchise Network Growth: Approaching 700 stores, up from under 100 four years ago.
4. Product Portfolio: Maintained a balanced mix with 40% below INR 1,000.00, 40% between INR 1,000.00-2,500.00, and 20% above INR 2,500.00.
5. Marketing Investments: Doubled advertising and promotional spending to 3.5% of revenue, up from 1.5% in the previous year.

The company reported improved consumer response post-September 22 when the new GST rates became effective. Management expects structural benefits from the rate reduction on lower-priced products, which constitute 40% of their portfolio.

Future Outlook

Bata India remains optimistic about its future performance:

• Expects to recover some gross margin in the subsequent quarter due to lower markdown spend during the upcoming USS (Ultimate Savings Sale) period.
• Plans aggressive expansion, particularly in franchise channels.
• Focuses on product innovation, citing success with the Victoria Ballerina line and Power Easy Slide.

As Bata India navigates through these transitional challenges, the company's strategic initiatives and balanced product portfolio position it to capitalize on the evolving market dynamics in the Indian footwear industry.